Rachel Reeves will ‘have to raise around £30bn at the budget’
Thomas Pugh, chief economist at tax and consulting firm RSM UK said today’s figures mean Rachel Reeves will need to find about £30bn in the Budget.
“Today’s release had a little bit of good news for the chancellor. Government borrowing came in almost bang in line with the OBR forecast in September, which is positive after August’s borrowing overshoot. What’s more, cumulative borrowing so far this year was revised down a little,” he said.
“The bigger picture, though, is that cumulative borrowing is still significantly above the OBR forecast and the latest release still paints a picture of deteriorating public finances. The chancellor will probably have to raise around £30bn at the budget in the autumn.
“Crucially, the current budget deficit, which is now what matters for the fiscal rules, came in at -£13.4bn, £1.2bn above the OBR forecast and is now cumulatively £13.0bn higher for the fiscal year so far. That is the number that matters for the chancellor’s fiscal mandate and is even less positive than the headline numbers suggest.
“Looking ahead to the budget in the autumn, we are pencilling in tax increases of around £30bn. We expect fiscal drag, NICs base broadening and a salami slicing of other tax increases to do the bulk of the work with some pencilled in spending cuts to help at the end of the decade.”
Karl Matchett21 October 2025 08:32
UK borrowing costs top £20.2bn in September
Government borrowing costs hit £20.2bn in September, in line with OBR expectations but the highest for the month since Covid.
The figure was more than £1.5bn higher than the same period a year ago, while overall borrowing for the first half of the year is nearly £100bn.
ONS chief economist Grant Fitzner said: “Last month saw the highest September borrowing for five years.
“Debt interest, the cost of providing public services and benefits all increased compared with last year, more than offsetting the rise in receipts from central government taxes and national insurance contributions.
“Likewise, the first six months of the financial year saw the highest overall deficit since 2020.”
Karl Matchett21 October 2025 08:12
Business and Money: Live news updates 21 October
Morning all, lots to come during the next few hours, starting with the latest UK financial data affecting you (or paid for by you in this case): inheritance tax levels, plus the latest borrowing data.
Next month’s Budget is on everyone’s agenda so these – plus tomorrow’s inflation figures – are important numbers.
Karl Matchett21 October 2025 08:07
